In the next 1-3 years, I want to buy a condo. Right now I make $30K a year. I should be making about $40K within the next couple of years. I have about $15K saved right now, that is not off a credit card. Is it unreasonable to want a condo of $120-160K with these conditions? What do mortgage lenders like to see? I know by then my bad credit will be history, and the good accounts will have aged a bit nicely. Any tips, resources? I'd love this waterfront/rural condo.
Just based on my own experience, you will probably qualify inside the range you specify - as long as interest rates stay in the 7-8% range. The problem might be the condo fees. In qualifying you for a mortgage, lenders will calculate a ratio of your total monthly obligations to your income. The higher your monthly condo fee, the less of a mortgage you will qualify for. Any other payment obligations, i.e. credit cards will reduce that further. Check out www.fool.com or www.quicken.com for some really good info on qualifying for a mortgage.
Personally, I think I'd be a stretch to qualify for a mortgage over 3 times your salary. The previous poster has a good suggestion. Check out the Motley Fool real estate board. There is an awful lot of knowledge and experience over there.
Author, Try this web site. I have been a lurker there for a while and find it to be a great source for real estate information. http://www.creonline.com/ Ed
Assuming you don't have any other debts when you apply for your mortgage, and you are making about 40K, with FHA guidelines, you can get a mortgage in the 1200-1350 range, which would cover the price of the low end waterfront condos With a conventional loan, you're a little more restricted, but if variable rates are pretty low when you purchase, you can still qualify. There sooooo many finance options out there, it's just a matter of research. As far as not qualifying for a mortgage 3 times your salary, that's not necessarily true. I had sales agents and lenders trying to get my to apply for 180+ homes with my salary only in the 60k range. Just remember, qualifying for the house isn't the biggest consideration. Make sure you have a payment you're comfortable with. Make room for car payments, incidentals, furniture, etc. I live in the south, where a car is necessary. For people who live in densely populated cities, cars are not a necessity, so they can rely on public transportation. Therefore, they'll probably be more inclined to get a larger mortgage. I hope this helps
Newcomer is right about the other debts you have, you need to consider them in the formula. Typically, your mortgage payment can't be more than 28% of your gross income (income before taxes) Your total debts (credit cards minimum payments + car leases/payments + your mortgage payment) can't exceed 36% of your gross income. These are just guidelines, sometimes a lender will stretch things, especially if you have sterling credit.
